Mailbag: Controversial Ideas on Mortgages and Crypto

Andy Snyder|November 21, 2022

Last Wednesday, we told our VIP subscribers that it is historically quite odd for the federal funds rate to be below the rate of inflation…

And for it to be half the rate of inflation is just plain crazy.

Money is still cheap – too cheap.

Less than 24 hours after our live call with premium subscribers, the Fed’s James Bullard put out a statement agreeing with us.

He says the Fed’s key rate may have to go to 7%.

That’s much higher than current estimates. The market doesn’t believe 7% is possible.

But it will happen. And it will hurt.

Inflation isn’t going away. At current rates, we’re still feeding it.

Sorry… Not Sorry

That’s the idea that brings us to the mailbag… and perhaps the most controversial idea that we continue to pound the table on. It seems we still haven’t converted everybody.

Let’s open the strings to our beloved mail pouch…

However, I was really taken aback by your Manward Financial Digest article from this past Monday, titled “Why You Shouldn’t Pay Off Your Mortgage.” It wasn’t the idea you were presenting, as I agree that effective management of debt is essential to long-term wealth. I was shocked by how you presented your view.

I do not think you meant to call many of your customers “idiots”… but you did. There are many other factors (e.g., time to retirement, the need to reduce monthly expenses, etc.) that you should have included in your article to better inform your readers and help them with this important financial decision. The decision to pay off one’s mortgage is not as cut and dried for everyone as you made it out to be, and there certainly wasn’t any reason to be offensive in expressing your opinion.

I look forward to reading future Manward Financial Digests. – Reader D.R.

Of course we didn’t mean to call all of our readers idiots. Most of them aren’t paying off their mortgages.

But seriously, we really want folks to pay attention to this idea. It’s an extremely important topic… one that’s filled with dangerous emotions.

Yes, it feels good to not have that monthly bill. Yes, it feels good to not have to worry about next week’s check or the sheriff pounding a “for sale” sign into the front yard.

But emotions are very expensive. Just ask a divorce lawyer.

We agree there are many factors, but most of them come down to feelings of security.

Security’s fine. Just know that it comes with a cost. And as interest rates rise, that cost will rise with them.

Our real point, though, isn’t so much about mortgages. It’s about the idea that money goes where money is treated best.

If you truly want to overcome the great pull of mediocrity, that idea has to be foremost in your investing mind.

With rates set to soar even higher… it’s critical. Put your money where it has the most potential at the risk level you’re willing to accept.

And since we’re on the subject of controversial things…

In light of what has happened to FTX, how should we view investing in crypto right now? – Reader A.K.

We continue to be a big fan of crypto.

Most folks stop listening right there. They don’t hear the rest of our thought.

But there’s more to it.

We’re a big fan of crypto… if that crypto has some sort of fundamental value. We’ve said it many, many times.

Coins that act like they’re the next dollar… that represent some ugly art… or that are supposedly valuable simply because a few Twitter feeds say they’re neat… are worthless. They’re for intense speculation only… and that speculation goes away when rates start to soar. (See our big idea above.)

But coins or tokens that represent something with fundamental value are worth your attention.

Here’s the real key to all of this…

The folks in Washington just got their butts handed to them. They’d been cozy with FTX for months. They walked right alongside its criminal leaders… and never got a whiff of trouble.

The SEC and its troops are about to get dragged through the mud for it.

They deserve it.

But now they’re finally going to start to make good on their promises for regulations. Many of the rules already exist. Gary Gensler has said as much.

Now they need enforced.

As the money police belt up and polish their handcuffs, prices will get volatile. Some coins will go away. Others will be put on a pedestal.

You’ve certainly seen by now that we’re working overtime to show our readers where the money in the crypto space will go next. It’s headed for a tiny corner of the blockchain market that already has the SEC’s blessing and is outside the scope of what’s happening with FTX and so much of the “traditional” crypto world.

If you haven’t seen our presentation on this market yet… check it out now.

Things will move quickly.

After all… money goes where money is treated best.